Business, general

Phone companies call for customer surcharge

Article Abstract:

Some US local telephone companies are asking the FCC to approve a monthly surcharge for their customers. The companies claim the fees are necessary in order to pay for the costs related to number portability services, which allow customers to keep their telephone number when they move to a rival carrier's service. Some of the carriers, including Nynex Corp, want to charge a $1 to $2 fee per phone line each month, whether or not the customer changes carriers. The long-distance companies contend the proposed fees are merely an attempt to boost revenues, and to combat the losses the local phone companies will experience when their markets are opened to competition. A company like Nynex, which has over 16 million access lines, could make almost $200 million per year from the fees. Critics claim the fees are merely a response to the Telecommunications Act of 1996, which is intended to increase competition and lower prices in the local telephone markets.

The FCC is investigating the current price structure of the complex system under which long-distance telephone companies pay to access the networks of RBOCs. The RBOCs are forecasted to lose at least a portion of the $23 billion in yearly revenue they collect from long-distance companies for calls on their networks. The FCC's role in this debate is to determine just how much the RBOCs will lose, and when the long-distance companies can expect lower fees. These debates should last for at least six months, and the FCC expects to render its decision by early May 1997. The long-distance companies are lobbying for a significant fee reduction, while the RBOCs maintain that long-distance carriers are ignoring the high costs of building and servicing local networks. Two solutions that the FCC is considering include a free-market approach favored by the RBOCs, and a regulatory approach preferred by the long-distance companies.